Chin and Eliscu, who have a Neutral rating on Intel shares, and a $22.50 price target, write that too much attention has focused on Intel’s need to come from behind in chips for smartphones and tablets, while the true focus should be on how to repair lack of growth in desktops and notebook computers.

Much of the discussion aboutIntel’s next CEO has centered on its need to “fix” its mobile strategy. However,for what Intel is lacking to date in its mobile market penetration, we believe itcould make up going forward with its next generation productsTo rejuvenate PCs, we believe its next CEO needs to refocus on cost reduction of ultrabook-(like) form-factors that can bring the 4 key iPad features – high-res touch display, light-weight, instant-on, long battery life into the $600-900 range. Longerterm, we believe he/she must look beyond PCs and even smartphones, which will be maturing by the time Intel ramps its 14nm products, and generate a further-reaching vision for the direction of client computing as Google is doing with Glass.

The authors also think Intel needs to press its advantages in server processors to lock out competing chips based on ARM Holdings (ARMH) technology:

The challenge for its next CEO will be to vigorously defend vs competitiveproducts (mainly ARM-based) that could gain acceptance for large enoughslices in the data center market that in turn could noticeably slow Intel’s serverprocessor growth. Server processor users such as Facebook and Baidu buildtheir own servers and are looking to lower costs through the use of very lowpower/low-cost processors, while semiconductor makers such as Cavium aim to deliver 5-10x performance/watt/dollar advantage vs Intel for a select group of data center workloads. As a result, we believe it is possible that given the breadth of customers seeking an alternative to Intel, with the breadth of vendors claiming performance/watt breakthroughs, at least a few may “break down the gates” and take some share from Intel.

Chin and Eliscu think Intel needs to expand its budding business as a contract chip foundry for other companies, which has started with small efforts for Altera (ALTR) and a handful of others:

In addition to Paul Otellini, we believe two key Intel executives havechampioned its foundry strategy – Chairman (and former CFO) Andy Bryant aswell as COO (and leading CEO candidate), Brian Krzanich. Thus, even if thenext CEO is not Brian Krzanich, we do not expect Intel’s foundry strategy tochange much near-term. However, over time, as Intel’s foundry capabilities mature, we would look to Intel’s next CEO to utilize foundry not only as a profit center but also to potentially realize additional strategic goals. These could include: 1) gaining early access to complementary technologies that could enhance its own offerings (e.g. Xeon processors + FPGAs), 2) developing new types of intellectual property for foundry customers that could also be used for its own silicon (e.g. high-speed I/O interfaces), 3) capturing leading-edge silicon bill-of-materials share by fabbing for captive OEMs that would otherwise not buy Intel products for those functions, 4) disrupting foundry competitors (and their fabless customers) by taking away leading-edge foundry market share, whose profits would have been used to fund the development of future generation process technologies.

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APRIL 30, 2013 4:20 P.M.

Cube Monkey wrote:

Ok T., lemme get this straight. A proverbial Intel bear is trying to give the next CEO advice? Maybe they haven't been keeping up with current events, but the last two goals listed are seeds that have already been sown and are just beginning to bear fruit. This isn't new stuff. I'm sure the new CEO will keep those initiatives cranking.

The first task listed is pretty ridiculous. Intel is expending huge effort with their Ultrabook initiative. PC growth has slowed because of tablets. This is true, but after most consumers have their first tablet, what will their next purchase be? For some, it will be a PC upgrade - for the eBay/Facebook-only users, probably not. Tablets need to run their course. To suggest that Intel not activily pursue phones/tablets is akin to saying a decade ago: "Intel shouldn't waste it's time trying to get into servers because they are dominated by Sun, HP and IBM"

APRIL 30, 2013 4:42 P.M.

the_floating_gates wrote:

"Chin and Eliscu think Intel needs to expand its budding business as a contract chip foundry for other companies, which has started with small efforts for Altera (ALTR) and a handful of others:"

Didn't PO already indicate there are several others customers in the pipeline

those fools still don't understand Intel's foundry strategy

disrupting foundry competitors (and their fabless customers) by taking away leading-edge foundry market share, whose profits would have been used to fund the development of future generation process technologies.
I red this on the Yahoo Intel message board months ago -LOL

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